Rate Report

Rate survey: Average card rates rise to 14.98 percent

Interest rates on new credit card offers rose this week for the first time in almost two months, according to the Weekly Credit Card Rate Report.

The national average annual percentage rate (APR) rose to 14.98 percent Wednesday after remaining at 14.96 percent for about a month.

This week’s change was due to a reshuffling of the database. Occasionally, changes the cards in the database in order to more accurately reflect the current market. In this case, two cards no longer being offered online have been replaced with similar cards. Earlier this month, American Express removed the Costco True Earnings card from its online offerings after ending its partnership with Costco earlier this year. Meanwhile, the regional bank KeyBank is no longer promoting the KeyBank Platinum MasterCard Rewards card.

Rates expected to rise this month
After nearly seven years, the Federal Reserve is finally getting ready to raise the federal funds rate, possibly as soon as next week.

Federal Reserve chairwoman Janet Yellen said in congressional testimony Dec. 3 that the U.S. economy has strengthened considerably in recent months and is now strong enough to withstand a widespread increase in rates.

Many consumer loans in the U.S., including credit cards, are tied to U.S. prime rate, which is in turn tied to the federal funds rate. When the federal funds rate increases, rates on variable rate credit cards and other loans tied to the prime automatically go up as well.

Yellen didn’t explicitly say that the rate-setting committee, known as the Federal Open Market Committee, is definitely going to increase the federal funds rate at its Dec. 15-16 meeting. However, analysts have widely interpreted her comments as a clear signal that, barring unforeseen events, the committee will begin raising rates next week.

Many analysts also predicted an imminent rate increase after the U.S. Labor Department reported Dec. 4 that the economy added 211,000 jobs in November.

In her testimony before Congress, Yellen emphasized that consumer spending especially has been robust this year, signaling that many consumers have finally taken control of their finances after being battered by years of anemic economic growth. “Household spending growth has been particularly solid in 2015, with purchases of new motor vehicles especially strong,” said Yellen in congressional testimony. “Job growth has bolstered household income, and lower energy prices have left consumers with more to spend on other goods and services.”

Housing prices have also risen and consumers’ stock portfolios have improved considerably, said Yellen, further boosting households’ wealth. Consumers have also improved their financial fortunes by aggressively shedding debt.

In addition, Yellen commented that many consumers appear to have taken full advantage of the lower rates caused by the Federal Reserve’s low interest rate policy by purchasing a larger number of big-ticket items, such as washing machines and cars. “These low rates appear to have been especially relevant for consumers considering the purchase of durable goods,” she said.

An increase in the federal funds rate will make borrowing more expensive. However, the increase in interest rates will be gradual, says Yellen, so consumers are unlikely to see much impact for some time.

 “The committee anticipates that even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the committee views as normal in the long run,” said Yellen.’s Weekly Rate Report
 Avg. APRLast week 6 months ago
National average14.98%14.96%14.99%
Low interest11.66%11.62%11.62%
Cash back15.26%15.27%15.28%
Balance transfer14.08%14.07%14.13%
Reward 15.11%15.09%15.12%
Instant approval18.00%18.00%17.93%
Bad credit22.73%22.73%22.73%
Methodology: The national average credit card APR is comprised of 100 of the most popular credit cards in the country, including cards from dozens of leading U.S. issuers and representing every card category listed above. (Introductory, or teaser, rates are not included in the calculation.)
Updated: Dec. 09, 2015

See related:Fed: Access to credit cards increasing

What’s up next?

In Rate Report

Card rates’ average remains at 14.96 percent for 3rd week

Dec. 2, 2015: Average rates on new credit card offers remained flat this week, according to the Weekly Credit Card Rate Report

Published: December 2, 2015

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Credit Card Rate Report Updated: August 14th, 2019
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